I am often asked by my older estate planning clients what they can do to protect their assets in the event they need to enter a nursing home. Under the regulations governing Masshealth financial eligibility, many assets would need to be spent down to pay for such care before benefits would accrue, but certain assets are exempt from countability. Once excellent way to protect assets for couples where one spouse is in the community and the other is in a nursing home is by the purchase of an annuity. While the payments from an annuity are countable as income, the community spouse may use excess and otherwise countable assets to purchase an immediate, irrevocable monthly annuity, and the purchase of such will not be considered a transfer which disqualifies the institutionalized spouse from eligibility for Masshealth benefits so long as the technical requirements of the regulations are met. The term of the annuity may not exceed the annuitant’s life expectancy and should generally be as short as possible. At the end of the term, when the annuity converts to cash in the name of the community spouse, that cash will not be considered a countable asset. Of course, if you are considering the purchase of an annuity as an asset protection technique, you should seek the advice of competent counsel to advise you on the necessary terms and procedures, but consider the use of annuities as an effective estate planning and asset protection tool.